Yesterday (July 1), the China Federation of Logistics and Purchasing (hereinafter referred to as CFLP) and the National Bureau of Statistics Service Industry Research Center released the China Manufacturing Purchasing Managers Index (PMI) for June 2013, which was 50.1%, down from last month. 0.7 percentage points. On the same day, HSBC's China manufacturing PMI final value of 48.2 in June hit a new low in nine months.
Qu Hongbin, chief economist at HSBC China and co-head of Asia Pacific for economic research, said that China's manufacturing industry is under pressure from falling orders and increasing inventories. As the decision-making level is less willing to introduce stimulus policies, the current slowdown in growth will continue in the coming months.
The downturn in the two major PMI indices cast a shadow over the economic data for the second quarter.
Two major PMI indices are down
The 12 sub-indices in the official data have dropped to varying degrees compared with the previous month.
Among them, the expected index of import, backlog orders, purchase volume and production and operation activities fell by more than 2 percentage points; the production index, new order index and new export order index fell by more than 1 percentage point; the remaining indexes fell by 1 percentage point.
Since the beginning of this year, the production index has been higher than the new order index. The production index in June was 52%, which was 1.6 percentage points higher than the new order index. The report believes that the accumulation of this pattern of oversupply has now caused a weak market. In the current situation, steady growth should be based on controlling the release of production capacity and maintaining a basic balance between supply and demand.
This trend is more pronounced in the HSBC PMI. In the statistics, the final value of the new orders and output indices fell below 50 (dry line), with new orders falling back to 47.6 and being in the second consecutive month. Under the dry line, and hit a new low in nine months.
The contradiction between the production and demand side is unresolved, and the price and inventory also have a chain reaction. The official PMI shows that the company has not continued to replenish the raw material inventory, which also led to a decrease in the purchase price of raw materials. The raw material inventory index for June was 47.4%, down 0.2 percentage points from the previous month. The purchase price index of major raw materials was 44.6%, down 0.5 percentage points from the previous month. Both indexes are below the line of glory.
The economic data in the second quarter is worrying
In mid-July, the National Bureau of Statistics will release China's economic data for June and the first half of the year. The PMI data reflects that the GDP growth rate in the second quarter is likely to be lower than the 7.7% level in the first quarter.
Zhao Qinghe, senior statistician of the Service Industry Research Center of the National Bureau of Statistics, said that the small manufacturing enterprise PMI has been below the critical line for 15 consecutive months, which indicates that China's economic operation is intricate and needs close attention.
“China's manufacturing industry is under pressure from falling orders and increasing inventories.†Qu Hongbin said that the recent “money shortage†in the interbank market is likely to reduce the growth of off-balance-sheet business, which will lead to the deterioration of financing conditions for small and medium-sized enterprises. The policy level has indicated that short-term stimulus policies will not be introduced, and GDP is expected to continue to slow down to 7.4% in the second quarter.
The impact of the “money shortage†that emerged in late June on the real economy will gradually become apparent. Zhu Haibin, chief economist at JPMorgan China, said that the interbank interest rate will fall back to a more reasonable level in the coming weeks, but it is likely to remain above the pre-stress level if financial institutions transfer the increased financing costs to the final The borrower, in fact, is equivalent to tightening the money supply, which will put downward pressure on economic activities.
Bank of Communications analyst Wang Yuwen expects that the seasonally adjusted GDP in the second quarter will be about 1.5% from the first quarter. Based on this calculation, the actual growth rate of GDP in the second quarter is about 7.5%, down 0.2 percentage points from the first quarter.
Economical no hard landing risk
Despite the second-quarter GDP or new lows, most people in the industry believe that China does not have a hard landing risk, and the bottom line regulation thinking can continue.
According to the CFLP report, the official PMI for each month in the second quarter remained above 50%, with an average of 50.5%, indicating that the basic pattern of overall economic stability has not changed.
According to the report, social inventories continue to decline. The finished goods inventory index continued to fall to the level of 48.2%. The purchase price index continued to be low, and the business operation burden was significantly reduced. Order demand is generally in a moderately growing range. The macro economy has a reasonable growth range of more than 7% in the second quarter.
"The core of current economic development has begun to shift to the development of people's livelihood. Economic growth has placed more emphasis on employment and income growth, rather than simply looking at speed. There must be new ideas for macroeconomic regulation and control." CFLP said that with the continuous improvement of the market economy, macroeconomic regulation and control should be more Focus on the word "tune", we must give full play to the role of market regulation.
"It is expected that the financial reform will accelerate in the next few years. The following reform measures may be taken in the next 6-12 months: to expand the daily trading volatility within the current exchange rate system; to increase the floating range of deposit interest rates, and secondly to cancel the restrictions on loan interest rates; Introduce a deposit insurance system." Zhu Haibin said.
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